Topic Archives: Convert New Issue Analysis

Convertible bonds new issues usually drive-by deals whereas most new high yield and loan issues go through a 1-2 week road show. This is becuase a large part of a convertible bond’s valuation is equity and requires less credit/indenture analysis. Most convertible bonds do not have financial covenants. Once a deal is announced, investors have a short amount of time (usually 1 day or less) to perform a quick and dirty analysis on the deal. Daiwa does a good job of this type of analysis and I have documented most of it here. Exceptions are clearly stated.

Savient Pharmaceuticals (SVNT) new issue 01/31/11

$125m (+18.75m) sen unsec cb coming 2night from JPM. Terms: 7yr, 4.5-5% up 20-25%, nc4 pctns. UOP=KRYSTEXXA. > 09/10 FDA approval co failed to sell themselves hence the capital raise. Imminent US launch w/EU filing. Co needs liquidity (w/out cb, cash will be flat by mid yr.) PF Cash = 200m Debt = 125m LTM […]

Dendreon (DNDN) new issue 01/26/11

$500m (+75m) sen secured cb coming tonight from JPM. Terms: 5yr, 2.375-2.875% up 40-50%, pctns. Happy Meal. UOP = m/facturing expansion. All about Provenge. Exp to peak w/$2.2B US & 1.3B EUR rev & exp 2012 rev of $865m & EBITDA of $360m (wont even refer to LTM cos you buy this for the future […]

Ares Capital (ARCC) new issue 01/26/11

$300m ($45m) sen unsec cb coming tonight from JPM/BOA/WFC/DB. Terms: 5yr, 5.75-6.25% up 17.5-22.5%, div pctn > 35c. UOP = repay debt/gcp. invests in debt/equity of middle mkt co’s (portfolio = 40% 1st lien, 36% sub, balance equity & other). CP & revolver financing done @same time as Allied Capital acq in 2010. BBB/Ba1 rates. […]

Apollo Investment Group (AINV) new issue 01/16/11

$150m (22.5m) 144a senior cb overnight from MS. Terms: 5yr bullet, 5.75% up 17.5%, dvd prot > 28c per qtr. UOP = repay credit facility & gcp refooered 98-98.5. Shall we just cut & paste ARCC color? A closed end mgmt co. BBB rated. $2.2B mkt cap. Cash = 26m, debt = 1.4B, $880m available […]

Omnicare (OCR) new issue 12/16/10

$500m (75m) sen sub cb coming tonight from BARC/GS/JPM. Terms: 15 yr, 3.5-4% up 20-25%, s/c 8 yr@120%, full pctns UOP = buyback $525m 3.25% convert. Another b/e trade but with o/r interest 7.75% 2020 sub straight oas = 464 (mid)., 10 yr sub CDS = 450-475 & 4% prf = 690 ics (25 vol). […]

RTI International Metals (RTI) new issue 12/15/10

$150m (+26.25m) sen unsec cb coming tonight from CITI/FBR. Terms 5 yr, 3-3.5% up 27.5-32.5%, pctns. UOP = gcp. Small $800m co which doesn’t see titanium supply/demand inbalance to unwind until 2H11 earliest. PF Cash = 304m Debt = 175m LTM EBITDA = 24m FCF = 6m Lev = 7.3x Cap ex w/remain high until […]

Heartware International (HTWR) new issue 12/15/10

$100m (15m) sen unsec cb coming tonight from JPM. Terms: 7yr 3.5-4% up 22.5-27.5%, full pctns, concurrent 1m (+150k) stk placement UOP = gcp. $1B heart pump implant manufacturer which competes w/THOR’s Hertmate product. Co public <2 yr w/recent approval for Europe. Estimate = co to turn profitable in 2013 if Bridge to transplant hits […]

ShengdaTech (SDTH) new issue 12/15/10

$90m (30m) 144a senior cb pricing tonight from MS. Terms: 5 yr, 6-6.5% up 20-25%, 3 yr put, protections. UOP = buyback $62m of $90m outstanding 6% which are puttable next June. Balance of proceeds for NPCC production capacity expansion. Chinese manfacturer of nano-precipitated calcium carbonate (NPCC) used in a varity of products (primarily tires […]

Home Inns (HMIN) new issue 12/15/10

$160m(24m) sen unsec cb tonight from JPM.CS. Terms: 5yr, 2-2.5% up 20-25% UOP = strategic acq/gcp. Leading Chinese hotel chain in 134 cities (404 leased/324 franchised). 54 lease/60 franchise in construction w/250 exp for ’11 (opening 50 midscale hotels under Yitel brand within 4-5 yr). Occ rate = 96.7% vs 91.5% FY09. liq good 3Q10 […]

Clearwire (CLWR) new issue 12/02/10

$500m (+100m) 2nd lien sen cb coming 2nite from JPM. Terms: 30yr 8-8.5% up 17.5-22.5%, nc7y, puts 7, 15, 20, 25. Cncrnt combined $675m sec/str8 deal. UOP=gcp. 54% owner Sprint has 30d option on $585m add’l cb. Cap/raise will fill s/t funding gap & take pop/coverage to 120m from 103m. Add’l funding needed further build […]